We start the afternoon in this great Chamber, Westminster Hall, with a debate on the recent report by the Select Committee on Environment, Food and Rural Affairs entitled “Brexit: Trade in Food”. It is normal on these occasions for the Minister to be present at the beginning of the debate, although that is not required under Standing Orders. I suspect he may be approaching the Chamber quite quickly. There being no further intelligence on where the Minister might be, I know the Parliamentary Private Secretary will take a keen interest.
I beg to move,
That this House has considered the Third Report of the Environment, Food and Rural Affairs Committee, Brexit: Trade in Food, HC 348, and the Government response, HC 1021.
It is a pleasure to serve under your chairmanship, Mr Gray. As you have said, let us hope we see a Minister in the very near future.
Before we begin, it is one year since the disaster of Grenfell Tower, and I want to remember those whose lives were devastated when they lost their loved ones and their homes. We should all reflect on that.
I welcome the Minister’s announcement in the Chamber last night that the Department for Environment, Food and Rural Affairs will bring forward two Bills on sentencing and animal sentience, as recommended by our Committee.
The British public voted to leave the European Union in 2016 so that we could take back control of our money, laws and regulations. Farming is a prime example of that. For 40 years, all our policies have come from Brussels, but now we will be able to decide a new farming policy for ourselves. I chaired the agriculture committee of the European Parliament, and in trying to deal with 27 countries, from Finland in the north to Spain in the south, it can sometimes be difficult to come up with a policy that suits everyone. We have a bright future, provided we embrace what will be good not only for the environment, but for farming and food production in this country.
We need to know exactly what impact Brexit will have on our agricultural sector. That is why the Environment, Food and Rural Affairs Committee held an inquiry on Brexit and food, which we published on 18 February. My Committee spoke to many people—farmers from all sectors, academics and other food and farming professionals—and they all agreed that trade is crucial to the farming industry. As a rural MP and a former dairy farmer, I know more than most how important that trade is. [Interruption.] It is good to see the Minister arriving. I will allow him to take his seat. It is all right, Minister. It is usually me who is late, not him.
I must give my apologies for missing the start of the debate. The reason is that I thought a debate of such importance should be in the main Chamber. I was hovering outside the wrong Chamber, but I am here now. I apologise for missing the first few minutes.
That is a very good apology. The Minister elevated our debate to the Chamber when we are actually in Westminster Hall. I appreciate his explanation and thank him for arriving. I am sure his officials will fill him in on the start of my speech.
We have a great farming industry and high-quality products, and it is important that that is supported over the coming years. Continued trade with the EU is essential to ensuring our farming sector thrives after Brexit. We must have an outward-looking, global Britain. That will be key to seeing our agricultural sector flourish, but we must also maintain a good share of our home market and home production. I feel strongly about that. We buy 70% of our food and drink imports from the EU, and we sell 60% of our food and drink exports back to the EU. We can see that trade to the EU is extremely important, and that that means that a farming-focused free trade agreement with the EU is essential. We have always sought reassurance from Ministers that as the deals are done, DEFRA, DEFRA Ministers and the Secretary of State will be at the forefront.
If we do not reach a free trade agreement with the EU, our agricultural goods might well be subject to tariffs once we have left. EU tariffs are high. Tariffs on dairy products are over 30%, and they can be as high as 80% on frozen beef. Reverting to World Trade Organisation rules would be even worse, as tariffs there are far higher for agricultural goods than for many other products. In addition, all countries must be treated equally under WTO rules. For example, Irish beef would need to have the same tariff as Brazilian beef, which could be devastating not only for us, but for Ireland. That is why our report recommends that the Government undertake work as a matter of urgency to evaluate the impact of any deal that they negotiate.
We are calling on the Government to publish a sector-by-sector analysis on the impact of Brexit so that we can better understand how tariffs will affect our farmers. For instance, in the dairy sector we import a similar amount to what we export. We are often importing yoghurts and cheeses, and we have the ability to produce more of those ourselves. We could therefore reduce the need for imports, as we could in other sectors, such as the pig and lamb sectors.
We export some 40% of our lamb, and import some 35%. On the face of it, we could say, “That’s okay. Stop the exports and the imports and we can eat all our own lamb,” but in reality we are exporting fifth-quarter joints and importing legs of lamb from New Zealand. We can see that the trade in lamb backwards and forwards, and with France in particular, is incredibly important.
The Secretary of State assured us on the sector-by-sector analysis yesterday in Committee, and I seek your assurance, Minister, that that work is under way and will be published. In my view, it should have been done already. We have seen, rightly in many respects, many more extra staff being taken on in DEFRA, but I have to say bluntly to you, Minister—
I beg your pardon, Mr Gray. I say to the Minister, what is happening with the sector-by-sector analysis? When can we expect the analyses to be published? In all the evidence we took for our report, we found that the trading arrangements affect different sectors in very different ways. We need to know exactly what those trading arrangements will be to ensure that we maintain our food production.
A farming-focused free trade agreement is not the only way that the Government can support farmers. I am sure that you, Minister—
It is perfectly reasonable to say, “As the Minister will know,” or, “As I hope the Minister will say in replying to the debate.” It is not in order to say, “As you know, Minister,” or, “As I hope you will say in your reply.” You may not use the word “you” apart from when you are referring to me, and I have no part in the debate beyond chairing it.
Thank you, Mr Gray, for that clarification.
Farmers offer vital support to the rural economy, with the food and farming industry generating more than £110 billion a year, and employing one person in eight in the country. Food and drink, much of it produced in this country, is a vital industry, and the way our food is produced is so important for our natural environment, as we can see in many parts of the country.
The Secretary of State was in Exmoor and Devon last week, where the farming of sheep and cattle produces that lovely landscape with many natural features. Within those natural features is a managed farm landscape, which is why the profitability of food and agricultural production is so necessary. We can look at environmental payments, but they will not be able to replace the profitability of agriculture and food production entirely. The two need to go hand in glove, which we are really keen to see happen.
As a member of the EFRA Committee, I apologise for not being able to stay for the whole debate; I am on the Ivory Bill Committee, which sits again at 2 pm.
I entirely support what the Chair of the Select Committee says about the need for much greater clarity and strategic direction from the Department, but it is also important that we hear a lot more from the Department for International Trade and the Department for Exiting the European Union. I asked about rules of origin and their impact on the food sector this morning and got a very disappointing response. Does he agree that all three Departments need to send a clear message to farmers and food producers about what the future holds for them?
I thank the hon. Lady for her intervention and for the excellent work that she does on the Select Committee. She makes a very good point about geographical indicators. Interestingly enough, when the Secretary of State visited Exmoor and Devon last week, there was talk of giving protected geographical indication status to Exmoor, where we can sell lamb from both sides of the border—from Somerset and from Devon.
All those things are intricately linked to the need for a future food policy, so that people know where their food has come from and so that we can market it better and, hopefully, get a better price for the producer. That money can then be linked back to the landscape. I cannot emphasise enough that the landscape and the food production, especially in certain parts of the country such as big livestock areas and more marginal land, are intricately mixed.
We must also ensure that we have high-quality vegetable production. Where we can produce organic vegetables, we should; where we can produce vegetables with fewer pesticides and fungicides, we should. We must be very positive about a food policy. I am worried that in the recent Command Paper on health and harmony, the only real talk of food production was very much at the high end. The high end of food production is great—from local restaurants, to tourists buying food and to everything linked to the countryside. However, we also need affordable food that the whole population can eat.
At least 90% of our food business goes through our major retailers, and people often buy on price. As we move forward, we have to be assured that our vegetable production not only is of good quality, with high welfare standards, but comes at a price that the average consumer can afford to—and will—pay. Whatever we buy in life, it is a choice, so not only do we want to have good, high standards, but it needs to be affordable.
We have a managed landscape with many natural features, as I said. The onus is on the Government to engage more closely with the industry to provide the food and farming sector with greater clarity. Tit-for-tat tariffs will do more harm than good—just look at the situation in America. The Americans have started putting tariffs on steel and aluminium. That might well help the steel and aluminium industries in America, but it will drive costs up for the industries in America that need to use those products. Food, a commodity and a manufactured product, does not need tariffs on it. In the end, that will only create more costs and could well lead to higher prices to consumers. I do not believe that those tariffs will ever come back to the producer.
It is imperative that we have a farming-focused free trade agreement with Europe. I repeat what has been said day in and day out in this House: two years since the referendum, all sectors—not just the farming sector— need some clarity on the direction in which we are going. People in all lines of business need to make investments, but those in the beef and dairy sectors in particular need to have a long-term view of where the world is going in order to make investments.
On that point, it is worth mentioning Northern Ireland, which the Select Committee considered. There is a particular need for as much certainty as we can give regarding Northern Ireland, because I think 45% of all sheep produced there go south of the border. We made a specific recommendation on Northern Ireland, as any change in trade arrangements could be more disruptive there than anywhere else in the kingdom.
I thank the hon. Gentleman for that intervention. He is also a very good member of the Committee. He raises a good point regarding the border between Northern Ireland and the Republic of Ireland. The lambs go south and the pigs go north to be processed—and the milk goes round and round in circles, as far as I am aware. A lot of processing goes on across the border. If anywhere in the whole of the United Kingdom is essential, it is that border, for obvious political reasons—reasons of peace and many others. We must get that border right. I am sure it is not lost on the Minister that we need to do more regarding that border.
The various systems we are putting in place are interesting. I am quite happy for the Government to look at having a new system. It does not have to be the single market and the customs union, but we have to ensure that the new system we devise is recognised by the EU, because the Republic of Ireland, obviously, is an EU member state. Those are the great challenges, and I am sure that that is not lost on the Government.
If tariffs were imposed, I believe that consumers would suffer. Tariffs would also make it more difficult for our farmers who produce food to our world-renowned high standards to compete and properly export, inhibiting the building of “Brand Britain”, which is going to be even more important in the future than it has in the past. We will be able strongly to market not only regional produce, but the British product. We have only to go back to horsegate, when horsemeat was being put into burgers because it was a lot cheaper, and look at the food cycle, the provenance of food and the food processing industry, to find that food travels all across Europe. Provenance, branding and the confidence that the world—and those in our own country—has in our products are going to be more important than ever.
As I said, the Government have struggled with their post-Brexit policies. I am hoping that we are seeing some clarity; we have had some interesting votes this week. I believe that will bring forward a clarity, so that we can move forward; the industry needs to have confidence to invest and to address the opportunities and challenges that Brexit will offer. We must go into this with our eyes open.
That is not all. We have dealt with the cross-border situation in Northern Ireland; investing in an IT system to support a more efficient export certification process could minimise delays, and we need to make sure, whether through the Agriculture and Horticulture Development Board, the Food Standards Agency or our veterinary services, that we have the necessary personnel to be able to get the licences up and running quickly, especially if we are going to have a change in the system as we cross the border. It is very important that we move quickly where we are talking about perishable products, which include not only agricultural products but fish.
It is possible to design a bespoke support system that encourages greater productivity and further strengthens our animal welfare standards, which are already among the highest in world. To do that, we need clarification from our Government. It is good to have very high welfare and environmental standards, but the quid pro quo is that the standards of imported products should maintain our high standards, through the free trade arrangement with Europe—which should not be difficult because our standards are currently the same—and free trade arrangements with other countries across the world. Otherwise we will put our producers and farmers out of business.
Our food and drink sector needs a reinforced trade deal. “Brand Britain” must become a national advertisement to the world, showing what an outward-looking, open nation we are. The new farming policy we call for in the Select Committee report is about creating a “Brand Britain” that delivers high-quality food that is affordable for all. British agriculture should be front and centre of all our negotiations, not left to feed from the crumbs under the table.
I thank the Chairman of the Select Committee and its members for the work that they have put into the report over the past few weeks. The food and drink sector is enormously important across the UK. Mr Gray, I hope you will forgive me if I focus a little on the Scottish food and drink sector, which has grown enormously and very successfully over the past few years. It is a huge and very important employer, not least in rural communities, and the excellence of its products is increasingly recognised throughout Europe and elsewhere in the world.
The fishing sector in my own constituency is not quite what it once was, but it is still there, with fishermen working exceptionally hard producing fine produce that is then sent off around Europe from the quaysides in places such as Pittenweem. A large agricultural sector produces some of the finest food and drink, which makes its way to destinations throughout the UK and elsewhere in Europe.
There are other successful food and drink industries, including a growing number of whisky distilleries, which complement yet further the fantastic, vibrant food and drink sector in North East Fife. I recently visited a newly opened gin cottage, Darnley’s Gin, near Kingsbarns, which I would heartily recommend to people if they make it up as far as St Andrews. I recommend that the Select Committee visit it at some point, if it ever gets the opportunity. We cannot overstate how valuable such industries are and, as I have said, they are particularly important in rural communities.
The hon. Member for Tiverton and Honiton (Neil Parish) said something enormously important about clarity in the Government’s plans to leave the European Union. The Committee is right to seek greater clarity, regardless of what side of the debate people may have sat on. The EU is Scotland’s biggest overseas export market for food and drink—69% of food exports go to the EU, which is worth three quarters of a billion pounds. In Pittenweem, for instance, the lorries take the food products and they arrive in restaurants in Spain, France, Belgium the very next day. That is where customs checks become exceptionally important, and I know that is something that the Minister will want to touch on.
Fresh food and drink processes are where the customs union really comes into its own, and I wonder whether the Minister can give us some clarity. We are seeking clarity for something that may happen not in the years to come but in the months to come. In a sector that is already planning for next year—it does not plan a day ahead and it may plan years ahead—clarity has so far been very poor, and I know there have been a huge number of concerns about that.
The National Farmers Union Scotland has called for the UK or for Scotland to remain part of the customs union for that very reason—the critical importance of the customs union to our food and drink sector, to our export markets and our partners elsewhere in Europe—but there are other important areas as well. Protected geographical status is exceptionally important to the food and drink sector. Perhaps the Minister will want to update us on where we are with that. It is not just with whisky: Arbroath smokies recently obtained that status and there are other such products as well, so it is an important point.
The food and drink sector is employing an increasing number of people. Newburgh in my constituency has the highly successful Lindores distillery, and farmers next door are looking for a little certainty as well. We know from the Scottish Government’s analysis that any plans to take us out of the European Union will have an impact on our economy, and that is reflected in the UK Government’s own analysis, which we have all seen: that any plans to take us out of the European Union will hit our economy hard.
The Scottish Government analysis shows a loss of 8.5% of GDP, £12.7 billion, and by 2030, £2,300 per individual. That will hit industry, including the food and drink industry, because it relies on our relationship with the rest of Europe so heavily. Although those are figures from the Scottish Government—they have published those figures, so they are publicly available—we know that they reflect the UK Government’s figures. They are pretty much the same figures, because they were drawn together by a wide range of independent economists, whom the Government employ to teach them about this kind of thing. Will the UK Government now publicly publish their figures to inform a fuller debate about these key issues? The Scottish Government have been very open about this, but the UK Government have been less so.
I have mentioned the devastating figures for Scotland —my part of the United Kingdom—but Professor Graeme Roy of the Fraser of Allander Institute says that the food and drink sector in other parts of the UK will be even harder hit. Other hon. Members will reflect on that, but there is nobody here from Northern Ireland. We know how important it is to sort out that border problem, given the food and drink exports that go to and fro over the course of producing food and drink items. The World Trade Organisation rules would be the worst of all.
One issue that affects farmers now is seasonal workers. I hope the Minister will tell us how we can tackle that issue. Lord Duncan, the Parliamentary Under-Secretary of State for Scotland, was good enough to join me at a farm in my constituency recently. Mr and Mrs Mitchell, who run Allanhill farm, told him that they need clarity now, because their seasonal workers are down. The produce of that berry farm is for consumption across the UK and elsewhere in Europe, and they need to know whether to plant their next crop so they can harvest it next year. That is a very difficult decision if they do not have certainty about seasonal workers. This is not something we will be debating in the future; we are debating it in the here and now. Will the Minister reflect on the urgency of our food and drink producers’ situation?
That is echoed by James Orr, who farms around Blebo Craigs in my constituency. I am sorry to be talking about my own constituency, but those are the examples I know best. For example, I recently learned that there are only two places in Scotland where broccoli can be grown. One is in my constituency, because it is so sunny—yet another reason for the Select Committee to visit us. Broccoli has to be harvested by hand, and it is really important that it is not left to rot in the field. If seasonal workers are down, there is the distinct danger that that will happen.
On trade, the Scottish Government have done a lot of work on farmers markets and on promoting the food and drink industry, because agriculture is, of course, reserved to the Scottish Government. Will the Minister tell us how that will work in the future? The Secretary of State for Scotland is making a statement right now, but we have not had much in the way of certainty. The legislative consent motion for the European Union (Withdrawal) Bill, which will have a direct impact on this area, was refused by three quarters of parliamentarians in the Scottish Parliament—not just Scottish National party Members, but Labour, Liberal Democrats and Green Members, too.
Will the Minister tell us how we will take that forward? For instance, what will happen in the future if there is a dispute between the UK and Scottish Governments? I know the Minister will do everything he possibly can to avoid disputes, but such things will happen. If there is a dispute over the trade in food and drink, will Westminster simply override that decision, and therefore 20 years’-worth of devolved settlements?
What will happen if there are more trade disputes with, for example, the United States? Although the tariffs are being applied to steel, there is considerable concern that they will also affect the food and drink sector. The whisky industry, for example, has highlighted that. If we step outside the European Union, we step away from those closest to us in terms of our trade and our economy. They are closest to us politically and geographically, which is particularly important to the food and drink sector. What happens when the UK stands itself alone against the world? That is not a particularly comfortable place to leave our food and drink producers.
What happens to access to the critically important single market? Like the customs union, the single market and freedom of movement are hugely important to our food and drink sector. We have no clarity about those issues at present. I know the Minister will not be able to give us all the answers, but he needs to provide certainty. I thank Committee members again for their valuable work on this timely report. I hope the Minister’s response will reflect the urgency of the situation, as Committee members have done in their work.
I am delighted to serve under your chairmanship, Mr Gray. I am very pleased that, yet again, we are in this place debating food and farming. I am even more pleased that the Minister is here, because otherwise I would not have been able to ask him the questions I want to ask him. I am sure he will try to answer them.
The Chair of the Select Committee, the hon. Member for Tiverton and Honiton (Neil Parish), raised a number of issues that I wish to take up. I pay tribute to my hon. Friend the Member for Bristol East (Kerry McCarthy), who has had to leave, and my hon. Friend the Member for Keighley (John Grogan). They are very strong members of the Select Committee, as is my hon. Friend the Member for Ipswich (Sandy Martin), who has not had a chance to say anything yet, but if he wishes to intervene and put something on the record, I am more than happy to let him do so.
I am a former member of the Select Committee, and I am grateful that it is in good hands. I was lucky to be chaired by David Curry and Michael Jack, and the hon. Member for Tiverton and Honiton has carried on in the same good order. He has shown how the Committee is making a difference. The quality of its work is in the preciseness of its arguments. Why write a long report when a short one can do the job?
The hon. Gentleman’s speech ranged far and wide, so I make no apology that I will refer to the later report, which may also be discussed in this place in due course. It is, however, contingent on the report before us. I will refer to a number of things in the Government’s Command Paper, and how the Select Committee has investigated them.
Let me start with where we are with this whole exercise. Although farming is a relatively small part of the British jigsaw, it is a very important part of European functionality, because half the EU budget is spent on farming. My first question to the Minister—I have asked this previously—is, when will we get into serious negotiations about farming, and particularly food? Although farming is not a huge constituent part of the British economy, food and food exports are. As the hon. Member for Tiverton and Honiton said, that sector is responsible for about £110 billion-worth of business, and employs one in eight people. It is an important part of the UK economy, so we have got to get this right whatever the post-Brexit situation is.
I echo the hon. Gentleman’s request to see the sectorial reports. Like lots of hon. Members, I went to look at the original sectorial reports. I have to say that a good A-level student would probably feel reasonably pleased with them, but I do not think their quality was much better than that. We need definitive evidence, because these sectors are very different and will require different negotiations. It would be good to know when some of those negotiations will take place, and that there will be ministerial—not just civil service—input, because they will be complicated.
I am not sure—I know the Minister is sure and can allay my fears—when we will start talking to the WTO. We are a signatory to the WTO, but through our membership of the EU. At what stage will we start to talk to the WTO about how we will exercise our independence? The one thing that I know from all my time on the Select Committee, and since, is that when we start to get into the different boxes—amber, red, blue and green—and the aggregate measure of support, we get into enormous complexity, which will not be sorted out in a few weeks. That will take a long time.
I thank the hon. Gentleman for giving way, and certainly for his comments about the Select Committee. When it comes to tariffs and the European relationship with agriculture, the problem with the WTO is that if we were under WTO rules rather than in a free trade arrangement with Europe, French and Irish beef would have to have the same tariff as Brazilian beef. Imagine having to compete with Brazilian and Argentinian beef—we produce very high-quality beef in this country, but it would be difficult to produce it at the same prices as Brazil and Argentina.
Again, I am not an expert on the farming industry per se, as the hon. Gentleman is, but having talked to those who know about it, I know that the lamb market—Welsh lamb, in particular—is very vulnerable. I made the point that New Zealand would no doubt be keen to expand its exports to this country, but I was proven wrong in the sense that New Zealand can already export 200,000 tonnes of lamb. The big threat is actually from Australia, which has a more limited quota arrangement and will no doubt wish to have a free trade agreement—any agreement—so that it can export more to us. Again, that is a question I ask. I genuinely do not know where outside the EU—where 60% of our food exports go to—we can form all these free trade agreements.
Does my hon. Friend agree that the problem is not only where our exports will go or where our imports will come from, but that the laudable environmental and health and safety constraints that we place on agriculture in this country will not necessarily be replicated in countries in other parts of the world that may wish to export to us? We shall see a race to the bottom on environmental and health and safety concerns.
That is, of course, a real threat. I refer to the Government’s response to the Committee’s report. At paragraph 6, on “Regulations and Standards”, the Government cited the Prime Minister in her Mansion House speech, saying that
“the UK will need to make a strong commitment that its regulatory standards will remain as high as the EU’s.”
I should damn well hope so—excuse the proverbial—because if we do not, we will not be able to export to the EU. It is important to maintain the existing standards, and we would want to drive them up—the Minister has said that—but that will be in some jeopardy if we form free trade agreements with countries with lower standards, because those would preclude the higher-standard export markets that we have now.
Looking ahead to the Select Committee’s “The future for food” report—to laud the Committee again—its value is that it has all the right headings. The keynote is uncertainty: we need to allay the element of doubt that is creeping into what is now a tight timescale. Looking at the report, the questions will obviously be about budget—I am pressing the Labour party to ensure sufficient funding. We have already guaranteed the same money until 2022, but to be honest with the Minister, we want to go further, because we do not think that the transitionary period is long enough. That has come through in both reports.
There is not enough money to make the transition work. Whatever form of payment system we come up with, it will be a pretty traumatic change. For some farmers, it will be the most traumatic change they have ever had in their lives. We would therefore like more money to be allocated and for things to be done properly. We are not against public using moneys for public goods, but we have to handle the situation with extreme sensitivity. Otherwise, we will lose a lot of good farmers who cannot make the transition easily.
To go back to today’s report, I have some questions arising from the Government response. How will they deal not only with tariffs, but with non-tariff issues? In my constituency, some of the manufacturing companies say that the problem is never with free trade, or setting up free trade agreements, because they are set up all the time. The problem is when other parts of the world take non-tariff action, which is a real danger in the food sector. It would be good to know how far the Government have got and in what ways they are at least investigating how to deal with the threat of non-tariff barriers.
On the potential for increased paperwork, the Government are setting great store by a new computer system—as did my Government, to our cost, when we introduced the Rural Payments Agency, and I dealt with Accenture at that time. We were told then how everything was going to be wonderful because the computer would do it all for us. It would be good to know how far we have got with the new computer system and what it will do—there is the idea of “e-certs”, but whatever name it has, it is just a computer system. If we do not have the right brief to start with, we will not get the right outcomes. Therefore, how far have the Government got towards introducing that computer system in such a way as to cope with all the different pressures, whether of trade or of the standards and so on?
There is also the human dimension. The spokesperson for the Scottish National party, the hon. Member for North East Fife (Stephen Gethins)—to whom I should have paid due regard earlier, but I do so now—spoke about the need for seasonal workers. Another element, which was picked up on by the Select Committee, is the additional need for veterinary support. At the very least, we do not have enough vets in this country to do the work that is needed, which is why we recruit foreign vets.
That work will only increase, despite restrictions on immigration and on what is called mutual recognition of professional qualifications—a very good thing that ensures we get in people with equivalent qualifications to ours. Dealing with that takes time. We will need additional vets in the short run to deal with some of the new processes. Again, will the Government give us an update on their important discussions with the Royal College of Veterinary Surgeons, the British Veterinary Association and so on?
That leads on to the issue of customs and how those arrangements are being looked at. I must say that some of the Government’s answers are fairly sketchy. The response is a fairly brief piece of work—I laud the Select Committee again because although its work was brief, it was precise, but the Government did not necessarily tell us everything. Perhaps the Minister will fill in some of the detail, such as how much store is set by the IT system, how he will deal with border inspection post capacity and what is happening with some of the trade agreements with non-EU countries. All that will require a very different approach. I hope that we will not have a hard Brexit, but even under a soft Brexit those will be very complicated issues that are difficult to work through in the short term.
Another issue is country-of-origin labelling, which Members across the House would all support. Customers need assurance to know where something has come from and whether it is of the standard that they expect. Again, the Government have made lots of commitments, but it would be good to know how they will deliver on those commitments—what they said in paragraph 13 of their response was very good in aspiration, but not detailed in how they would action it.
In conclusion, there are many points of detail. That matters, because we should be entering a period of discussion where agriculture, hopefully, will be in the footlights. That is rare, because normally agriculture is somewhat in the shadows, but it is crucial at this stage because of what happens to our food chain. We must make sure we get this right to support the industry and the people who work in it. That may not be easy in the short run, but we must be clear where the strategy is taking us.
If there is any regulatory divergence from the EU, those of us who fear that things could get worse in the short run need the Government to be clear on what they are trying to do. What mechanisms will they employ and who will employ them? The Department for Environment, Food and Rural Affairs has taken on a huge number of new people—perhaps it should not have got rid of as many as it did when it was not at the frontline of these changes. It would be good to know how those people could be as effective as they should be, in a short period. Their knowledge alongside the ministerial team will be crucial. I sympathise with Ministers; I know how much pressure they are under, because this issue puts the Opposition under a lot of pressure due to the number of ways in which we have to respond.
I hope the Government have got the message that they need to be very clear on how they are moving forward. Otherwise, we will be back here week after week with debates, trying to ascertain what the detailed considerations really mean and how we will take British agriculture and the British food chain forward into the next decade, whatever our status with the EU. More particularly, they must make sure that British food is of as good a standard as it can and should be, and that it can be traded successfully with the rest of the world.
It is a pleasure to serve under your chairmanship, Mr Gray. I apologise again for being late to the debate, for the reasons I described earlier.
I thank the Chair of the Committee, my hon. Friend the Member for Tiverton and Honiton (Neil Parish), for introducing the debate. This is an incredibly important issue that matters to all sectors of the economy and to food and farming. I want to set out, for the record, the Government’s approach to our future trading relationship with the European Union, because that is important. Much of the report looked at the consequences of a possible no-deal Brexit, for reasons I can understand and that I will deal with, but it is important to recognise the UK’s position.
We are seeking a bold and comprehensive free trade agreement with the European Union. We want tariff-free access for all sectors, which would be reciprocated, and we seek a frictionless border. We believe that the growth of technology in the last 20 to 30 years means that we do not have to have as much friction at the border as some would claim. Indeed, we have looked the procedures used prior to 1993, when the single market was introduced—an important point that many people forget. We had frictionless borders not when we joined the European Union, but after 1993. Technology has assisted a lot with the frictionless borders that we enjoy today in the European Union—that is not just about the regulations of the single market.
I agree with the Minister entirely; it would be great if we could get the frictionless trade deal and frictionless borders. Is he convinced that when we have the technology—I think we have it—it will work? I must be quite blunt about the Rural Payments Agency, Natural England and others. I know he will defend them to the hilt, but I said yesterday that they are not fit for purpose. If they were in the private sector, they probably would be dead by now, because they do not handle things properly—every time, we get more and more problems. The key thing is whether we can get this to work and whether we can get Europe to agree to it. Ultimately, let us get those lorries across the border and back again. We all want that. That is the reassurance we are all looking for.
I agree with my hon. Friend. I was going to come on to why it is in everyone’s interest to do the type of agreement that we are offering. We do not believe that we have to have total uniformity of regulations on these various issues to have a frictionless border. It is quite possible to recognise what in trade jargon is called equivalence.
Our offer to the European Union is that bold and comprehensive free trade agreement, tariff-free trade and frictionless borders, where the European Union and the UK can both adopt a risk-based approach to any border checks they might put in place, assisted by technology. We want to give each other confidence by agreeing a set of arrangements through which we will recognise the equivalency of our various regulations. That can be done. Our starting point is not as a third country trying to establish a trade deal with the European Union, but as a member state that is stepping back from being a European Union member. On day one, we start with absolute uniformity of our regulations. That is unique in the world, which is why it is absolutely possible to do the type of agreement on borders that we seek.
The other point to recognise is that the European Union has a trade surplus with the UK in food and drink alone of £18 billion each year. It may feign indifference to its trade with the UK for the purpose of the negotiations that are going on, but that matters. Access to the UK market matters to Irish beef farmers, poultry producers in the Netherlands, pork producers in Denmark, horticultural producers in the Netherlands and cheese producers in France. They need access to the UK market. Therefore, it is in their interest to take up what we are offering, which is a comprehensive free trade agreement with frictionless borders.
I noted the hon. Gentleman’s points from his speech and will come back to them.
First, I want to address one of the questions posed by the report: what happens in a no-deal scenario? The reality is that there are quite a number of options open to an independent country in control of its own trade policy. It does not have to be most favoured nation rules, and that is the end of the story. One option for an independent country when setting its own trade policy would be to have unilateral tariff rate suspensions—it would keep the bound tariffs where they were, but it could suspend them on certain product lines if it wanted to. It also could have what is called an applied tariff for some product lines that was lower than the bound tariff set in the WTO schedule.
An independent country could also establish unilaterally something called autonomous tariff rate quotas—ATQs. They enable the country to create a quota in certain product lines to allow that tariff-free trade.
My hon. Friend the Member for Tiverton and Honiton pointed out that one of the issues is that those have to be what is described in trade jargon as erga omnes—open to all—around the world and not just to the European Union, but we could, of course, abide by our own sanitary and phytosanitary regulations. In a short period where such measures might prevail, our existing trading partners would find it easier to satisfy those and potential new ones. There are many tools in the box that we would have as an independent country controlling our own trade policy.
My hon. Friend also asked about a sector-by-sector analysis. He will be aware that in December last year, the Department for Exiting the European Union published analyses for each sector. The hon. Member for Stroud (Dr Drew) read that and was very complimentary about the detail in it. There was a specific report in there on the food and drink sector—my hon. Friend will be aware that, in addition to that, the Government have done a great deal of more detailed ongoing analysis and modelling—but for reasons that we have been clear about, and that I think Parliament understands, there are certain things in a negotiation that we should not put out there. Not everything that we have done has been published, but we have published that report sector by sector.
When the Minister says “sector by sector”, is he referring to the food and drink sector? Our report naturally referred to the individual sectors of agriculture—dairy, sheep, beef and so on. This issue is linked not only to trade, but to the support policies that will be needed. An extensive beef and sheep farmer perhaps needs the basic farm payment much more than a dairy farmer due to the overall income from that business. That is what we are particularly interested in.
Yes, I understand, and I was going to come on to that. Although, of course, we have done other, more detailed work, not all of which has been published, I think I pointed out in evidence to the Committee that in March 2016 the National Farmers Union commissioned a detailed piece of work by a Dutch university, which looked at precisely that issue—what would happen under a most favoured nation trading scenario for a range of sectors. I probably cannot go much further, except to say that I recommend that research to anyone with an interest in this area because its analysis was broadly correct. In summary, it showed that some sectors are indeed more exposed than others to our trade with the European Union.
Notably, as the shadow Minister pointed out, the sheep sector is quite dependent on our trade with the European Union. The analysis commissioned by the NFU bore that out. It also identified that there might be some impact on barley producers that export for the lager industry in Europe in a most favoured nation scenario. However, broadly speaking, for most producers in every other sector there would actually be a slight firming in farm-gate prices, because most sectors would have less import competition. It is hard to predict exactly what would happen in a no-deal scenario, but in a scenario in which it was slightly harder to export lamb to Europe and harder to import beef from Ireland, some mixed beef and sheep enterprises likely would diversify a little more into beef to substitute for Irish imports and put a little less into sheep, particularly if they were exposed to the export market in countries such as France, Greece and Belgium.
There would obviously be changes under such a scenario, but it is worth reflecting on debates in the House in the late 1950s on whether we should join the European Union or remain a member of the European Free Trade Association. I am afraid that, given the nature of the debates we are having now, I revisited some of those debates to understand how we got into this pickle in the first place. It is telling that in the late 1950s and early 1960s there was cross-party agreement that joining the European Union would be bad for agriculture. One reason we did not join early was that it was recognised that that would be negative for agriculture. It is interesting that the NFU analysis largely bears that out to this day.
Order. Two points. First, interventions must be quite short. Secondly, I am sorry to pull the hon. Gentleman up again, but it is an absolute rule in this place that hon. Members must refer to one another as “the hon. Member”, “him”, “the Minister”, “she” and so on. Hon. Members may not refer to the Minister as “you”, because whenever you use the word “you”, you are referring to me. Please make an absolute habit of using only the third person.
I am interested in history, but I am not necessarily interested in implementing all historical policies. To extend the history lesson, there was also a view in the 1960s that we should not have subsidies but we should have tariffs. Obviously, we have moved some way since then.
I always love a bit of history, but to bring us up to date, in all those previous reorganisations and structural changes, there was time to make changes partly because the British Government were deciding things for British farmers. Will the Minister assure us that the transition period must respect the importance of these changes, and that there must be support for those who will suffer if we get this wrong in the short run?
Yes. I was going to return to that point. The Select Committee report states that we have to take care during the transition. We absolutely recognise that. Indeed, in our recent consultation, we described what we have as an agricultural transition, where any changes we make to the support regime will be done gradually over a number of years to take account of the fact that we do not want to deliver unsustainable shocks to the industry that it would not be able to cope with.
My hon. Friend the Member for Tiverton and Honiton mentioned the importance of Northern Ireland. I absolutely understand that a huge amount of trade takes place across that land border. That is why, unsurprisingly, the way we should approach that issue dominates much of the discussion about our future arrangements with the European Union. He will understand that that is a much broader discussion, which is being handled by people in the Government more senior than me.
Let me pick up on some of the issues raised by the hon. Member for North East Fife (Stephen Gethins), such as customs, which is being looked at. We have a cross-Government working group, which has brought on board lots of Departments, including Her Majesty’s Revenue and Customs and the Treasury, to look at customs, as well as DEFRA and our Animal and Plant Health Agency to look at border inspection posts. DEFRA’s focus is ensuring that we have the right capacity at any border inspection posts, and we will seek to agree our approach to that. Generally speaking, customs is regarded as an easier and more administrative thing to do, rather than necessarily requiring lots of checks and infrastructure at borders. Technology really has moved on in that area.
I simply make the point that one of our biggest successes in food and drink—perhaps the biggest, and certainly the biggest in Scotland—is Scotch whisky. We have zero tariffs on Scotch whisky, but that sector competes globally and has a recognised international brand. It is also very used to dealing with national markets, even within the European Union, because there are different alcohol duty rates so there must be bonded supplies for each country. There are sectors that have got very good at managing borders. Several hon. Members made the point in yesterday’s debate that we have borders even within the single market for things such as customs duties.
Probably the second biggest food export from Scotland is Scottish salmon, which again is renowned around the world. Scotland’s biggest competitor in that sector is Norway, which is outside the European Union and outside the single market for the purposes of fish products, because, as the hon. Gentleman will know, the European economic area does not cover fisheries products. So there are sectors, including fisheries and Scotch whisky, that have developed quite sophisticated ways to address some of these challenges. This is not an insurmountable problem.
The hon. Gentleman also raised seasonal labour. We recognise that that issue is important, which is why the Home Office commissioned the Migration Advisory Committee to look at what our labour needs will be after we leave the European Union. The MAC is already doing that piece of work. It published an initial summary of the responses it received, and it is now looking in earnest at what arrangements we will need after we leave, and in particular after the end of any transition period.
However, in some ways we already have the necessary structures in place under our existing migration system, through things such as tier 3. That is currently set at zero because we have free movement of people, but we could make some allowance for work permits in less skilled sectors if we wanted to and deemed that we needed to. We have been clear that we are looking at the idea of a seasonal agricultural workers scheme. We had one, which ran successfully from 1945 until 2013, and we have been clear that we are looking at that issue. I worked in the soft fruit industry for 10 years, so I am fully aware of some of the challenges. Those are issues that we will have the power to deal with as an independent country—they will not need to be negotiated with others.
I am astonished by the Minister’s use of the phrase “an independent country” given that Ireland, Greece and Denmark all consider themselves independent countries. On customs and seasonal workers, he referred to infrastructure. I mentioned urgency, so what is the timescale for that infrastructure? We have heard from a wide range of experts—we still believe experts—that the end of 2021, or even the end of 2020 when the transition period ends, is not realistic. Have they got that wrong?
Look, on your first point—sorry, Mr Gray, it is a contagious problem. On the hon. Gentleman’s first point, there are degrees of independence. As things stand, as an EU member we do not have an independent farming policy, an independent fisheries policy or an independent policy on migration. When we leave and become not an EU member, we will have independence in those areas.
On the hon. Gentleman’s second point, there will be some challenges, but we have been working on this area. One scenario we have been planning for right from the referendum result is a no-deal scenario where we come out without an agreement, even in March next year. There are contingency plans and work has been done to prepare for such scenarios. While there will be challenges, we are aware of them and have been addressing them.
The problem is that those who might have come here in the future will not do so and we are now into the second year in which they would have been making such arrangements. What inducement is there for someone to come here, when effectively they have been told for two successive years they are not wanted, rather than go to other parts of Europe, as they are now?
There are anecdotal reports that more have come back this year because of recent changes in the exchange rate. Some daffodil producers in the west country say that it was easier to get labour this winter than last. It is quite common for seasonal agricultural workers to return for a number of years, and indeed levels of returning are one of the yardsticks used to assess the availability of labour.
The hon. Member for Bristol East (Kerry McCarthy) posed a question in an intervention about rules of origin. The Government are looking at that area. Obviously, not every nation state in the world is a member of the European Union. Lots of countries are not, and they have quite established procedures on rules of origin. While we have not reached a final position on those issues, there is, for instance, the pan-Euro-Mediterranean regional convention, which is a rules of origin system covering countries both in and not in the European Union. Other parts of the world have therefore addressed such issues.
I turn to points raised by the shadow Minister, who asked about how we are approaching the WTO. We have been clear that our schedule of tariff rate quotas on agricultural products should be divided between the EU and the UK based on an historical reference period. We regard that as a matter of technical rectification rather than reopening everything for renegotiation, and that is the approach we are taking on existing TRQs.
The hon. Gentleman mentioned New Zealand lamb and pointed out that we have a TRQ of just short of 250,000 tonnes for lamb from New Zealand coming into the UK. It is also important to recognise that, in recent years, New Zealand has only ever used about 70% of its quota. That demonstrates that long before the ceiling of that tariff rate quota is hit, they find themselves unable to compete with UK producers. I am more optimistic than some about British sheep producers’ ability to compete with New Zealand and Australia. Many do so already. As a country, we should not get spooked by some kind of New Zealand haka on lamb production. We need to get on the pitch and play, and I think we will find that we can beat them.
We have been clear that in any future trade agreements we will maintain our standards. We will not reduce our standards in pursuit of a trade deal. That is a common feature. It is quite possible for us, through doing trade deals with third countries, to require that those who wish to supply us under such agreements must meet our standards.
Just this morning, I visited the Agriculture and Horticulture Development Board and talked to officials who were involved in our negotiations with the United States on reopening its market for British beef, which we have worked on for a number of years. There are opportunities for British beef exports to the United States, but there are also one or two technical areas where the United States wants us to change our rules for those supplying them to meet their standards. For instance, they have a slightly different approach to monitoring things such as E. coli and to the methodology that a vet should use when visually inspecting animals as they arrive in the pen.
We could go in and say, “This is no good. You’ve got to change your rules to be like the British rules,” but we do not. Actually, we say, “Fair enough. Those suppliers who want to supply that market should do that. We should respect their rules, and they should respect ours.” Equally, if US producers want to supply the British market, it is absolutely open to us to say that that must be done on British standards. We are a free-trading country, and we will be open to doing trade deals, but we are clear that we have standards and values that we will not abandon.
We have very high standards in this country. We also use less and less antibiotics in producing meat. The Americans still use a lot more antibiotics, their environmental standards are lower and often their welfare standards are lower. On the antibiotic side in particular, we must be clear in negotiations that we do not reduce our standards and allow in products that have had many more antibiotics.
My hon. Friend makes an important point. In a trade negotiation we are talking about food standards, not just food safety. Some people misleadingly try to divert the debate, but it is about food standards, and issues such as animal welfare and the approach taken to farm husbandry are integral to those standards. We should not be shy about saying so.
A number of hon. Members mentioned IT systems. We—in the European Union—currently use the trade control and expert system, but we are doing a detailed piece of work to build a replacement system, should that be needed, and that work is well advanced. My hon. Friend asks in his Committee’s report for the Government to set out clarity about the future of the agriculture Bill. I am aware that this week the Secretary of State appeared before my hon. Friend’s Committee, where he was given that reassurance. The report also raised the potential impacts of tariffs on food prices. Again, as with the sectoral impacts, the Government are looking at this area, but we are not in a position to publish details. However, I recommend those hon. Members interested to look at work done by, for instance, the Resolution Foundation, which identified the fact that the impact on domestic food prices would be quite marginal, even under a most favoured nation scenario.
We have had a comprehensive debate covering a wide range of issues. I welcome the Committee’s interest and it bringing its report to the House for debate.
Thank you, Mr Gray; I wanted to ensure that we kept to correct parliamentary procedure, having been corrected a number of times this afternoon. I will do my best not to refer to hon. Members as “you” in future.
I thank the Minister for his summing-up speech. He mentioned the good work done by the NFU through a Dutch university on sector-by-sector analysis, which I welcome, but I do not think that takes the place of a proper sector-by-sector analysis by DEFRA, which still needs to be done. I make that point very strongly.
I also thank the Minister because I know the work he does to understand the trade deals and to get a good deal in the future for this country; he cares very much about that, which I respect. In particular, the deal we do on the border between Northern Ireland and the Republic will be important not only for Northern Ireland and our own country, but for the Republic of Ireland. I had an Irish grandmother from Dublin, which may account for many things. I find it fascinating that, after nearly 100 years of independence from the United Kingdom and of being its own country, the majority of the Republic’s trade is still with the United Kingdom. Not only is it important for us that we get it right, but it is important for the Republic of Ireland. I hope the EU, on the other side of the argument, also understands how important that is.
I like the Minister’s idea of a bespoke, risk-based arrangement. The idea that we will be able to open up and inspect every lorry will never actually happen, but we need to have a system where we are able to do that if we need to. What matters is the speed at which we can get through those borders, and keeping the trade that is so important. We have talked about trying to ensure that, as we do a future deal, there are no tariffs, because that will not be good for any sector, and especially not the farming sector, in the long run.
The shadow Minister referred to the fact that we must watch for interference with trade, not through tariffs but through other means. I remember that in my previous existence, when I was elected to the European Parliament in 1999, we were trying to get British beef back into France after bovine spongiform encephalopathy. Even under single market regulations and all the regulations that were in place, the French were masters at finding reasons why that beef should not go into their country.
Although I am very happy to trade with France and the rest of the European Union as we leave, we have to be conscious that those countries could find ways of disrupting trade. They still do it within the European Union now; they usually stop just before the Commission throws the rulebook at them. They are very clever at looking after their own trade, and we need to be equally clever to ensure that our trade goes into France and that, when we reciprocate those trade arrangements, they also honour their arrangements as we move forward.
Again, I thank the Minister, who has come to our Committee and had some very good and open exchanges. In the end, whether we voted to remain in the European Union or to go out, I believe now that a Brexit deal must be done. The people have decided, and we must make that work. Nowhere is that more important than in the farming and food sector, because it has been part of a common agricultural policy and trade policy for 40 years. We have great opportunities, but we must get this right—not only for food and farming, but for good food to be had by all in this country at affordable prices.
Question put and agreed to.
That this House has considered the Third Report of the Environment, Food and Rural Affairs Committee, Brexit: Trade in Food, HC 348, and the Government response, HC1021.